Business Incubation Case StudyBusiness Incubation …one more economic development strategy at our...
Transcript of Business Incubation Case StudyBusiness Incubation …one more economic development strategy at our...
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Business Incubation Case Study
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Preview
1. Intro to Business Incubation A. General
B. Northwest Regional Planning Commission
2. Virtual Incubation
3. Physical Business Incubation
4. Building Your Own Incubator
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Business Incubation: Introduction
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Definition
Business Incubation is…
the process of accelerating the growth and success of start-up and early stage companies through an array of business support resources and services that could include:
- Physical space
- Capital
- Coaching
- Common services &
- Networking connections.
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Business Incubation …one more economic development strategy at our disposal.
STRATEGY 1 Business Retention & Expansion STRATEGY 2 Business Recruitment STRATEGY 3 Downtown Redevelopment STRATEGY 4 Business Incubation
Another Tool in the Toolbox…
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Why Businesses Fail
1. Lack of Know-How
- Little understanding of business fundamentals
- Little prior business experience
- Poor preparation, initiation and planning
2. Lack of Capital
- Many start up with too little capital
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About 48% of businesses are still alive by Year 5.
(52% are DEAD!)
In an incubation environment the 5-year
survival rate is 87%
Incubation significantly boosts new business survival rates.
Incubation effect
87% survival rate for
incubated companies
Survival Rates Improve
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Average 2.5 years company starts
to take off
3-6 years company graduates
from incubator 7-10 years
things get exciting
YEARS
It’s a long term strategy
Company enters Incubator
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FAIL FAIL
Moderate
Struggle
Success
Home Run
Struggle
Moderate
Success
Moderate
75+ emp.
50 - 75 emp.
10 - 50 emp.
< 10 emp.
Success Varies
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Results to date 40 Companies 373 jobs $53 Million in Annual Sales $16.8 Million Annual Payroll $42.2 Million Private Investment
Company Age Emp.
A 4 years 47
B 5 years 34
C 5 years 18
D 5 years 17
E 7 years 14
But It Really Works!
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Grantsburg Enterprise Center
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20,000 sf Incubator 2 tenants
12,000 sf Incubator 3 tenants
Incubator graduates
Grantsburg Enterprise Center
20,000 sf & 12,000 sf
Grantsburg, WI
Pop. 1,200
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Siren Enterprise Center 16,000 sf
Siren, WI
Pop. 806
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Spooner Enterprise Center
(four facilities) 60,000 sf
Spooner, WI
Pop. 677
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“Virtual” Business Incubation
(Start here)
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Too many vacancies downtown! Business Plan Contest
Round 1 – 1 page describing idea Round 2 – Business Plan Round 3 – Presentation / Q&A Prizes
$10,000 start-up capital $2,000 sign & awning grant Website Newspaper & Radio advertising Chamber membership Coaching / mentoring (SBDC & SWIF)
Partners
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Building Renovation
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Elena’s Bakery “The Sweet Spot”
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https://youtu.be/k9RX5WAxtbA
Stamp-N-Storage
Business Plan Contest
Prizes
$5,000 working capital Coaching / mentoring
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Physical Business Incubation
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Goals
1. Populate industrial park
2. Diversify local economy
3. Spark entrepreneurial activity
4. Build tax base
5. Additional customers for power utility
6. Create jobs
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Location
Industrial Park
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Building Layout
80’ wide bays Bathrooms 2 Docks 2 Docks roughed in 3 drive-in doors Utilities separately metered
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Manufacturing
Must “Export”
Physical growth required
Admission Criteria
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Company Requirements
Coach / mentor (SBDC and / or Initiative Foundation)
Monthly check in w/ Incubator Staff
“Drop money to bottom line”
If successful – establishing their own facility.
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Won’t compete with private leasing.
We’re not “renting space” – we’re incubating companies.
No “lifestyle” businesses
No service businesses
Selective admission criteria
Dealing with Private Sector
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Features
Low rents ($3.84 psf)
Education
Resources
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Grantsburg Enterprise Center
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Grantsburg Enterprise Center
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Interior
Grantsburg Enterprise Center
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Grantsburg Enterprise Center
Interior
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Hutchinson Enterprise Center
20,000 sf 5 bays (each 4,000 sf) 2,000 sf offices Conference Room Work Room Break Room Guest Offices (2)
Key card entry system
SB2030 energy standard
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
Laser marking, laser etching and laser engraving Many of the products are class III implantable
devices. Obtaining ISO 9001 Certification 8,000 sf Current employment 3 Ft / 2 PT 2-Year projection 10 FT 3-year projection 15 FT
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
Manufacturer of precision cut foam, polystyrene and Styrofoam.
“If you can dream it, we can built it with foam!”
5,000 sf 3 FT employees
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
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Hutchinson Enterprise Center
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Construction Budget
Line Item Cost
Architectural & Engineering $55,000
Construction Monitoring $38,030
Site work / Parking lots / Footings & Foundations $705,140
Building / Interior SOG / etc. $1,332,860
Alternates $182,200
Miscellaneous (Key Card Entry / I-T items) $17,752
Contingency $128,681
TOTAL $2,459,663
Base bid was $2,038,000
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Alternates Included
Alternate Cost
Offices $138,800
Concrete truck lot $11,300
Windows / Drywall $25,000
8’ Metal Liner $7,100
TOTAL $182,200
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Funding Your Incubator
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Funding Your Incubator
I. Tax Increment Financing A. Existing Tax Increment
B. Economic Development TIF District
II. MIF Dollars A. De-federalized
B. Federalized
III. City A. Excess Bond Fund
B. General Fund Balance
IV. Federal EDA
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Action Steps
Join InBIA.
Attend InBIA Annual Conference.
Visit Hutchinson.
Do a “virtual” incubation project.
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Review
1. Intro to Business Incubation A. General
B. Northwest Regional Planning Commission
2. Virtual Incubation
3. Physical Business Incubation
4. Building Your Own Incubator
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Questions?
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Business Incubation Case Study